President Obama just submitted a new, 10-year federal budget that has me very worried. The primary reason for my concern is tax hikes. As I expected, the mammoth $3.8-trillion budget for the next fiscal year raises taxes on businesses and upper-income households by $2 trillion over 10 years. And after what could be called very minor spending cuts, the country still will face $8.5 trillion in added debt during the next decade.
The budget for fiscal 2011 imposes nearly $1 trillion in tax increases on families with incomes above $250,000 during the next 10 years, and it does so by allowing the Bush tax cuts to expire. That’s income, mind you, and not take-home pay or profits. That means a small businessperson with income of $250,000 or more would pay a much bigger portion of that income to Uncle Sam. And because most of the jobs created in this country are produced by small businesses penalized by the new taxes, I think we can safely say that this budget is not conducive to job growth.
How much will taxes go up? Well, the two top income-tax brackets would rise to 36% and 39.6%, from 33% and 35%, respectively. For families earning more than what the president thinks is a mystical sum of $250,000 per year, capital gains and dividend tax rates would rise to 20% from 15%. According to The Wall Street Journal, upper-income families would face $969 billion in higher taxes between 2011 and 2020.
To put it quite simply — the taxes are coming, the taxes are coming, and it’s your job as a smart citizen to make sure you take steps to keep your tax liabilities as low as legally possible.
If you don’t already have a good CPA, then I highly recommend you consult with one soon, especially now that tax season is here.